by Pia K. Hansen

Ron Caferro started the Ecolite Manufacturing Company back in 1970 and has run it ever since. The company has become a local success story, now employing about 150 people making components for light fixtures and air conditioning equipment. But Caferro has just about had it with the state of Washington, which he says isn't doing enough to maintain a favorable business climate. When the state Department of Labor and Industries (L & amp;I) announced that workers' compensation rates were set to go up by more than 40 percent, Caferro "got really mad."

Because of protests from business owners and state lawmakers, Governor Gary Locke has now set the rate of increase at 29 percent -- but that's still too much for Caferro.

"That would mean an extra $100,000 we'd have to pay out [each year]," he says. "Yes, part of it comes from the employees, but I pay most of it. And even if the employees pay a share, that means I have to pay them more in the first place so they can make a livable wage."

The new rates take effect on Jan. 1, 2003, and the 29 percent increase is an average. Businesses with more dangerous work environments -- such as production plants -- pay more than those with not as dangerous jobs, like small retailers.

Caferro is not only mad about the rate hike, but he also says the workers' compensation system is flawed, leading many workers to be awarded compensation for false claims.

"I've gotten so many letters from other people telling me about false claims. It's not just me," says Caferro. He adds that other states -- like Idaho -- allow for workers' compensation insurance through privately owned insurance companies, cutting costs substantially.

As if that wasn't enough, he also has to comply with Washington's new ergonomic rules. These rules are put in place to protect workers from work-related injuries caused by repetitive motions on the job, but Washington is one of very few states that has these rules in place.

"At our plant, that means you can only work two-and-a-half hours at the same job, then you have to trade jobs and work in a different position for another two-and-a-half hours to avoid getting carpal tunnel syndrome and things like that," says Caferro. "So I lose production."

Caferro's story illustrates just how complex the fight for new and better jobs in Spokane and the Inland Northwest has become. If attracting new businesses and nurturing existing ones wasn't hard enough, now economic development officials have to protect their flanks and keep businesses from leaving.

"I'm having stuff shoved down my throat by people who've never worked a day in a factory," says Caferro. "I like having my business in Washington -- I grew up here, I've lived all my life here -- but if the L & amp;I thing goes through, I'm leaving the state. I'm moving to Idaho."

Help Wanted -- SIRTI, INTEC, SNEDA, EDC, AHANA are all acronyms for business or economic development organizations that work in the greater Spokane area. Some (like SIRTI) are business incubators. Others (like INTEC) focus on attracting specific types of businesses -- in this case, high-tech and medical businesses. Others (like AHANA) are focused on minority-owned businesses or ethnic groups that feel underrepresented by the usual organizations. Ultimately all these organizations have one goal: to attract jobs to Spokane and to help the businesses that are here stay healthy and profitable and employ more people.

Now Mayor John Powers has proposed yet another office to support economic development and job retention and creation: the city's own Office of Economic Development, or OED.

Powers, who also spearheaded the One Spokane Summit to grapple with poverty in Spokane, has said throughout his time in office that new jobs -- jobs that pay a living wage -- are the key to prosperity.

"Creating this office is an investment in the future," Powers says. "We have to create more jobs. It's our only way out of the poverty we face."

Kim Pearman-Gillman, who's an executive on loan to the city from Avista, has worked as the city's economic development advisor for the past year. She has come up with the proposal for the new office.

"Before I say anything else, I just want to make sure that people know I'm not advocating for my own job," says Pearman-Gillman. "I'm on loan, and I'll be here through March, but someone else will fill this position. Other people will do the jobs we are talking about creating here."

The office would cost the city an estimated $227,000 a year (around 0.2 percent of the city's total budget) and employ an economic development director, a full-time clerk, a brownfields project manager, a One Spokane coordinator and a marketing specialist.

"The person who is to work with the brownfields [underutilized sites], 80 percent of that position is paid for by a federal grant -- the city only has to fund 20 percent of that position," says Pearman-Gillman. By paying for that 20 percent, the city will also be able to utilize that person to promote the grants to local businesses -- and not just for administration.

The mayor has been criticized for spending money on One Spokane during a time when the city is cutting budgets across the board, but Pearman-Gillman says most of the funding for that position, too, will come from outside sources.

"That coordinator will have a $100,000 budget, but the city is being asked to fund only 20 percent of that. The other 80 percent come from private funds," she explains. "I mean, the One Spokane coordinator could reside somewhere else within the city -- it doesn't have to be in this office -- but it makes sense to have that person here so we can better align resources to address poverty."

Beginning in mid-July, the OED would also employ a marketing specialist. "The marketing specialist could reside in a different department as well, but it's a position that must happen," says Pearman-Gillman. "It is important that a community that believes in itself promotes itself that way. Are we creating a business environment that is marketable? Yes. Should we market it? Well, yes, so we can be successful. We have a lot here -- we just need to fit the pieces together."

But wait a minute, don't we already have the Economic Development Council (EDC) to take care of marketing and attracting jobs to Spokane? Why does the city need its own office all of a sudden?

"This is very different from the EDC. The city needs to have someone focus on how the infrastructure relates to businesses," says Pearman-Gillman. "How does the city think of its role in supporting economic development, which is ultimately what brings a new tax base to the city?"

She says businesses thinking of relocating to Spokane could contact the OED and find help cutting the real (or perceived) red tape at City Hall.

"Everything the city does is economic development. We have great police, fire and parks -- all things that businesses want -- but what is it we are not doing?" says Pearman-Gillman. "What is it a business needs from us, and how can we collaborate better on that? Look at the rest of the state. Almost all of the cities -- some of them way smaller than us -- have an economic development focus of some sort."

Coordinating experts and aligning the resources that already are available in a one-stop office would make it easier for those businesses that are constantly complaining about how much time they have to spend dealing with City Hall. But is this what it takes to stem the tide to Idaho?

Crossing the Line -- In late October, Spokane business pillar Metropolitan Mortgage and Securities moved part of its operations from Spokane to Coeur d'Alene. In a statement announcing the move, Met Mortgage President and CEO Paul Sandifur said, "We are neighbors to Idaho, and we are impressed with the business opportunities in that state. Our decision is based on extensive research of Idaho's favorable business climate and our ability to improve efficiencies."


Many other businesses and the jobs they account for could soon follow. Rumors of huge tax incentives and easy zoning changes are wafting across the state line, tempting Washington business owners to make the move.

"Moving to Idaho would cost me a couple hundred thousand," says Ecolite's Caferro. "But I would have that paid off in a couple of years, and I wouldn't have to deal with all this angst the government is bringing on over here."

Caferro says he has already contacted Jobs Plus, the Coeur d'Alene Area Economic Development Corporation, which is the Kootenai County version of Spokane's EDC.

"I'm not the only one who has called them," he says. "Since this L & amp;I thing has come out, they've gotten many phone calls. Businesses here are just fed up with it."

But is the business climate in our neighboring state really that much better?

"I think there is a difference," says Jonathan Coe, president of the Coeur d'Alene Area Chamber of Commerce. "The key difference is in the regulatory attitude. The city of Coeur d'Alene has worked really hard to develop and streamline a sort of one-stop shopping for businesses that are looking to launch new projects or build new buildings here, to make it easier for them to jump the hurdles and get things done."

There's one other main difference: the state of Idaho can offer some tax incentives -- or employee retraining funds -- that Washington can't match. And that is hurting Spokane's ability to attract new jobs, says Mark Turner, president and CEO of the Spokane Economic Development Council.

"We can't give tax credits, and we can't lend them money or credit. That's simply unconstitutional in the state of Washington," says Turner. "But they can do that just 15 miles away. That is frustrating."

A case in point, says Turner, is the company Center Partners, which chose to locate in the Coeur d'Alene area rather than in Spokane.

"They told us that Kootenai County offered them $3,000 cash per employee they hired for retraining, and they looked at us here in Spokane and said, 'What can you do for us?' Well, nothing," says Turner. "So they located [in Idaho], yet they still draw on the international airport and all the other things the Spokane area has to offer."

Again, ouch.

But Coe says North Idaho is far from a tax-free business zone sucking all economic development out of the Spokane area.

"In terms of our ability to provide tax incentives, that is actually very limited," he says. "The state is basically saying that it's not fair to provide tax incentives for new businesses to relocate here and not doing the same for the old businesses. The funds for retraining apply to both old and new businesses."

Civil War -- While most officials involved with economic development in the Inland Northwest say better regional cooperation would make the overall effort more effective, they're all working on their own, individual projects. Essentially, it's a free-for-all, with chambers of commerce, cities (including Spokane Valley starting next year), counties and quasi-public agencies all attacking the issue with little or no coordination.

The question during Thanksgiving week was whether Kootenai County would support a proposal originating in Spokane County that would turn Spokane and Coeur d'Alene into a combined statistical area. Adopting the new census designation would have ranked the Inland Northwest area as one of the 80 most populous areas in the nation, counting 500,000 residents -- bigger than the Boise area and other urban centers Spokane and the Inland Northwest often compete with for jobs. The city of Post Falls and the Post Falls Chamber of Commerce supported the initiative, but the Coeur d'Alene Chamber of Commerce didn't. And then came a letter from the Idaho congressional delegation to the federal government saying that because of a lack of community support, the delegation would not support the combined statistical area.

The half-million mark is a criterion for some companies looking for attractive areas in which to relocate. "Many companies have that as one of the parameters they look for," says Turner. "We could have gotten that if we had gotten the support we needed from Kootenai County."

But Coe is not sure the designation on its own would make much of a difference. "It could put us on the radar screen, but I'm not sure it would do more than that. We were opposed to the combined statistical area because we didn't think it would benefit our community," he says. "No one knows the implications and ramifications that could come with that." Coeur d'Alene would technically change from a rural area to an urban area overnight, meaning that EPA air quality requirements would apply and that some federal grants might not be available anymore.

But it appears that North Idaho gets to have it both ways: it benefits from being part of a greater metropolitan statistical area without having to admit it. In fact, Jobs Plus -- the North Idaho version of the EDC-- promotes that magic half-million population number on its Web site, writing that within a 35-mile radius of Coeur d'Alene, the population exceeds 500,000. The same site also lists 10 higher education facilities in the area. Seven of them are located in Washington state.

Regardless of Idaho's opposition to the combined statistical area, this is probably not the last we've heard of it. If the local governments can't agree on the designation, the Census Bureau makes the call when the number of workers that commute across the state line reaches 25 percent. This may happen as soon as 2008: that number is already around 21 percent.

It Takes Money to Make Money -- Spokane County has a huge number of people living in poverty; Kaiser Aluminum is not going to reopen its plants here; even the high-tech industry has been laying off people this past year. Next on the list for potential layoffs are many state institutions -- including colleges and universities -- which are all facing smaller budgets because of a state deficit that is now in the $2 billion range. If state reimbursement rates on Medicaid drop, hospitals might be the next sector to falter.

But regardless of how hard the area is struggling now, the Economic Development Council's Turner says it's about time we put our money -- or what's left of it -- where our mouths are.

"We have a strong history of private support," Turner says, "but there's a strong sense we need to bring the public sector in to support job development and retention as well." (The EDC's budget is roughly $1 million, with 60 percent coming from private sources and 40 percent coming from public sources.)

"Economic development is in everyone's interest," Turner continues. "I think it's the public funding that needs to be developed."

That may not happen anytime soon. The city's budget is not looking too bright, and the state is broke. At a Spokane County Commissioners' meeting earlier this week, Kate McCaslin and John Roskelley butted heads over how much the county should support the EDC. McCaslin would like to keep things as they are, but Roskelley would rather see the EDC receive $50,000 instead of the $300,000 the organization gets today.

But Turner is determined to get more funding -- and funding with fewer strings attached. He says bringing in a port district is one way to go about raising money for economic development.

"Forget the water thing. You don't need to have water to have a port district," he says. "We are the only area in the state of this size that is not yet a port district." The benefit of creating the port of Spokane County would be that a port district could assess its own property taxes and raise money for economic development. It's an idea that has been floated before, but it has never taken hold.

"It's a very dense political challenge," says Turner. "It would require a vote of the people and the election of a commission to run the district, and then, of course, that commission should be willing to use its taxing ability." Money raised in this manner could be used to provide newly relocated and already existing businesses with those much-wanted tax incentives.

And there's another option: increase the local sales tax and commit the extra dollars to an economic development fund. "We could ask the state legislature to allow a local countywide vote to create a dedicated fund for economic development," says Turner. "We'd ask to increase the sales tax with one-tenth of one percent. That would raise about $6 million. In January, this is definitely a bill we will try to have introduced to the legislature." This funding could go to develop infrastructure, as well as to provide incentives similar to the worker retraining grants companies can get in Idaho.

Turner is very supportive of the Mayor's proposed economic development office. "There are certain things that we can't do when dealing with clients," he says. "It would be nice to have a go-to person at City Hall. Another thing is that we can't plan Hillyard and we can't apply for federal grants for brownfields like the city can. This office would fill the need for public preparedness."

Pearman-Gillman says that's just what the city's economic development office's main focus would be -- aligning existing resources within the city to better bring new jobs to Spokane.

"It's important that the region is strong," she says, "but the city of Spokane still needs to protect its own position. People want to grow their families here, but in order for that to happen there have to be businesses that are hiring here so they can make a living. We have to create a greater tax base. We must create more income."

Comments? Additional insights? Share them at [email protected].

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